Which of the following Federal Reserve policies would increase money supply?
A. Reduce the discount rate.
B. Change the multiplier effect.
C. Increase reserve requirements.
D. Sell more US Treasury bonds.
Answer：A
A is corrent. The requirement is to identify the policy that would increase the money supply. A reduction in the discount rate would encourage banks to borrow more from the Federal Reserve and this would increase the money supply.
B is incorrect because the multiplier effect cannot be changed by the Federal Reserve.
C is incorrect because an increase in the reserve requirements would decrease the money supply.
D is incorrect because selling US Treasury bonds would decrease the money supply